Short answer
An M&A case asks whether a client should buy a company and at what price. The deal creates value only when the target's standalone value plus realistic synergies, minus integration costs, exceeds the price paid. Check the market, the target, the synergies and the price, value the target with a multiple, haircut revenue synergies, and finish with a walk-away price.
Key takeaways
- Value created by a deal equals standalone value plus synergies, minus integration costs, minus the price paid.
- Strategic buyers count synergies; private equity buyers usually value the target on its own plus their operating plan and exit.
- In a case, value with an EBITDA multiple and a payback check; a full DCF does not fit on a whiteboard.
- McKinsey found almost 70% of mergers missed their expected revenue synergies, so haircut revenue synergies before you price the deal.
- End with a walk-away price that leaves the buyer a meaningful share of the net synergies.
What is an M&A case interview?
An M&A case asks whether a client should acquire, merge with or invest in another company, and at what price. The client can be a corporate buyer adding a competitor or supplier, or a private equity fund weighing a platform deal. The case tests strategy, valuation math and judgment about risk in one sitting.
The case type is topical. Bain reported global M&A deal value of USD 4.9 trillion in 2025, up 40% on 2024 and the second-highest year on record. The same release noted that 45% of executives used AI tools in their M&A work in 2025. Firms with large deal practices, Bain above all, use these cases heavily; our Bain case interview guide covers the firm's format.
Strategic buyer or private equity: why the objective changes the structure
Clarify who is buying before you build a structure, because the buyer's objective changes what counts as value.
| Question | Strategic buyer | Private equity buyer |
|---|---|---|
| Main goal | Strengthen the core business | Return on equity above a hurdle at exit |
| Value driver | Standalone value plus synergies | Standalone value plus operating improvements and exit multiple |
| Typical holding period | Indefinite | About 3-7 years |
| Key risk | Integration fails, synergies missed | Overpaying, too much debt, weak exit market |
| Extra branch in the tree | Integration and culture | Financing and exit route |
A PE fund that already owns a similar company (a platform) can count some synergies too. Ask the interviewer, then state which branches your tree will include and why.
The four questions: market, target, synergies, price
Every acquisition decision reduces to four questions. They follow from one identity: value created for the buyer equals the target's standalone value plus synergies, minus integration costs, minus the price paid.
- Market: is the target's market attractive enough to own (size, growth, margins, competitive intensity)?
- Target: is the target a strong business on its own (market share, profitability, customers, management)?
- Synergies: what does the combination add that neither company could achieve alone, and what will integration cost?
- Price: what is the target worth, and what is the most the buyer should pay?
Questions 1 and 2 establish standalone value. Question 3 sizes what the buyer adds. Question 4 compares both with the asking price. Our MECE guide shows how to keep these branches from overlapping.
Valuation on a whiteboard: multiples and a quick payback check
Interviewers do not expect a discounted cash flow model on a whiteboard. Use a multiple instead: value equals a profit measure (usually EBITDA) times a multiple that comparable companies trade or sell at. If the interviewer offers no multiple, ask for comparable transactions, or propose one and say why.
Then sanity-check with payback: price divided by annual profit after synergies. A deal at €300M for €40M of annual EBITDA pays back in about 7.5 years before tax and financing. Both checks rest on calculator-free division, which our case interview math guide drills.
Synergy math, and why revenue synergies get a haircut
Cost synergies are more reliable than revenue synergies. McKinsey's analysis of 160 mergers found almost 70% failed to achieve their expected revenue synergies. Cost synergies did better: about 60% of deals delivered nearly all of them, though about a quarter overestimated cost savings by at least 25%.
The practical rule for a case: count cost synergies at close to full value, discount revenue synergies heavily (50% is a reasonable round haircut to propose), and subtract one-off integration costs such as severance, plant closures and IT migration. Convert run-rate synergies into value with the same multiple you used for the target.
Worked example: a European packaging acquisition
Prompt (fictional): Nordpak, a Danish maker of corrugated packaging, wants to acquire Verpa, a German competitor with €200M revenue and €30M EBITDA. Verpa's owners ask €315M. Comparable packaging deals closed at about 8x EBITDA. The CEO wants a recommendation and a maximum price.
Issue tree:
- Should Nordpak buy Verpa, and for how much?
- Market
- German packaging demand and growth (e-commerce, food)
- Margins and capacity utilization in the sector
- Target
- Verpa's share, customer concentration and plant condition
- Standalone EBITDA and its trend
- Synergies
- Cost: joint paper purchasing, plant consolidation, overhead
- Revenue: cross-selling Nordpak's printed boxes to Verpa's customers
- Integration costs
- Price
- Standalone value at a comparable multiple
- Value of net synergies
- Walk-away price
- Market
Data from the interviewer:
| Item | Value |
|---|---|
| Verpa standalone EBITDA | €30M |
| Comparable multiple | 8x EBITDA |
| Cost synergies (run-rate EBITDA) | Purchasing €5M, plants €4M, overhead €3M = €12M |
| Revenue synergies | €20M extra revenue at 20% EBITDA margin = €4M |
| One-off integration costs | €22M |
| Asking price | €315M |
Arithmetic:
- Standalone value: 30 x 8 = €240M. The asking price implies 315 / 30 = 10.5x, a premium of 315 - 240 = €75M.
- Revenue synergies after a 50% haircut: 4 x 50% = €2M.
- Total run-rate synergies: 12 + 2 = €14M of EBITDA, worth 14 x 8 = €112M.
- Net synergy value: 112 - 22 = €90M.
- Maximum value to Nordpak: 240 + 90 = €330M.
- Value created at the asking price: 330 - 315 = €15M. Nordpak would pay away 75 / 90 = 83% of the net synergies to Verpa's owners.
- Without the haircut, synergies would be 16 x 8 = €128M, and the asking price would look comfortable. The haircut changes the answer.
Walk-away price: a disciplined buyer keeps at least half of the net synergies, since it carries the integration risk. That gives 240 + (90 x 50%) = €285M. Payback at that price: 285 / (30 + 14) = 285 / 44, about 6.5 years before tax.
Recommendation: "Nordpak should pursue Verpa, but not at €315M. Standalone value is about €240M and realistic net synergies add €90M, so the asking price hands 83% of the deal's value to the seller. I would open around €270M and walk away above €285M. The main risk is the €12M of cost synergies, since a quarter of deals overestimate cost savings, so I would validate the plant consolidation plan in due diligence before signing."
Stephan's note: The walk-away price is the line interviewers remember. "Buy it up to €285M, and here is why" is advice a CEO can act on the same afternoon.
Private equity and commercial due diligence cases
A private equity (PE) due diligence case asks whether a fund should buy a company, judged mainly through its market. The fund wants three answers: how large the market is and how fast it grows, whether the target can hold or gain share, and whether the management plan's revenue and margins are credible. Build a bottom-up market model, test the plan against it and recommend with the key risk named.
The three questions a PE client asks
- Is the market attractive? Size today, growth drivers (volume and price), and how cyclical or regulated it is.
- Can the target win? Market share, customer views, competitors' moves and any capacity limits.
- Is the plan achievable? Whether the management plan's revenue and EBITDA follow from the market model, and which assumption carries the most value.
Commercial due diligence (CDD) is the consulting work that answers these questions before a fund bids. The case version compresses weeks of work into one chain of calculations.
Worked example: a market model for a bike-service chain
Prompt (fictional, all figures are case data): A PE fund is considering buying VeloCare, a chain of 60 e-bike service workshops in a northern European market. Management presents a plan to grow revenue from €30M to €48M in four years. The fund asks whether the market supports the plan.
| Item | Case data |
|---|---|
| E-bikes in use today | 5.0 million, growing 6% a year |
| Share serviced at independent workshops | 40% |
| Services per bike per year | 1.5 |
| Average price per service | €80, rising 3% a year |
| VeloCare today | €30M revenue, 60 workshops, 15% EBITDA margin |
| Peer EBITDA margins | 12-16% |
| Management plan, year 4 | €48M revenue, 72 workshops, 18% EBITDA margin |
| Fund requirement | Year-4 EBITDA of at least €8M to meet its target return at the expected price |
Arithmetic:
- Market today: 5.0M bikes x 40% = 2.0M bikes serviced; x 1.5 services = 3.0M services; x €80 = €240M.
- Market growth: volume and price combine to 1.06 x 1.03 = 1.092, about 9% a year. Over four years: 1.092 x 1.092 = 1.19, and 1.19 x 1.19 = 1.42. Year-4 market: 240 x 1.42 = about €341M.
- Share: today 30 / 240 = 12.5%. The plan implies 48 / 341 = about 14.1% in year 4, a gain of 1.6 points.
- Bottom-up check of the plan: revenue per workshop today is 30 / 60 = €0.5M. If existing workshops grow with the market: 0.5 x 1.42 = €0.71M each, x 60 = €42.6M. Twelve new workshops reaching half of mature revenue in year 4 add 12 x 0.71 x 50% = about €4.3M. Total: about €46.9M, roughly €1M (2%) below plan.
- Margin: the plan's EBITDA is 48 x 18% = €8.64M. At today's 15% margin on the bottom-up revenue: 46.9 x 15% = about €7.0M. Reaching the fund's €8M on €46.9M needs a margin of 8 / 46.9 = about 17%.
| Scenario | Year-4 revenue | EBITDA margin | Year-4 EBITDA | Meets €8M? |
|---|---|---|---|---|
| Management plan | €48.0M | 18% | €8.6M | Yes |
| Market-based revenue, today's margin | €46.9M | 15% | €7.0M | No |
| Market-based revenue, break-even margin for the fund | €46.9M | 17% | €8.0M | Just |
Recommendation: "The market supports the revenue plan: a €240M market growing about 9% a year makes €47-48M in year 4 realistic with twelve new workshops. The investment case rests on margin. The fund needs about 17%, above every peer today, so I would proceed to a bid only if diligence shows where two extra points come from, such as parts purchasing at scale or higher technician utilization. Without that evidence, the bid should reflect the 15% margin case."
The structure is the lesson: the market model tests the revenue line, and the decision usually turns on one assumption the market cannot confirm.
How Bain and L.E.K. cases lean toward due diligence
Bain states on its private equity page that it works with about 80% of the world's largest PE firms and has completed more than 22,000 due diligence cases (official). StrategyCase reports that L.E.K. case interviews mirror the firm's CDD work, test multi-step chains from market size to share, margin and EBITDA, and bring PE-style acquisition cases mostly in final rounds (reported, May 2026). In both, an early error carries through every later step, so write each figure down as you go and check it against the interviewer's data.
Five M&A prompts to practice
- A Dutch dairy cooperative considers buying a Belgian cheese maker. Hint: separate milk-procurement synergies from brand synergies.
- A private equity fund weighs buying a chain of 40 German physiotherapy clinics. Hint: standalone clinic economics, then add-on acquisitions.
- A European airline considers acquiring a struggling regional carrier. Hint: slot value and fleet overlap.
- A software company wants to buy a competitor mainly for its customer list. Hint: churn after acquisition and the revenue-synergy haircut.
- A logistics group considers merging with its largest rival. Hint: competition-authority risk belongs in the price branch.
More deal prompts sit in our list of case interview questions.
Cracking the Case sets out three business-case frameworks and three complete candidate cases worked through in full. For the calculator-free division and percentage work that deal math demands, The Second Key to the PST offers 26 more timed questions with a full answer guide.
Frequently asked questions
What is the difference between an M&A case and a private equity case?
A strategic buyer asks whether the combination is worth more than the parts, so synergies drive the answer. A private equity buyer asks whether it can buy, improve and sell the company at a return above its hurdle, so standalone performance, debt and exit value drive the answer.
Do I need to know DCF valuation for an M&A case interview?
You should understand what a DCF does, but interviewers almost never ask for one. A multiple of EBITDA or earnings, plus a simple payback check, is the expected whiteboard method.
What are cost synergies and revenue synergies?
Cost synergies are savings from combining operations, such as joint purchasing, closing duplicate plants or merging head offices. Revenue synergies are extra sales from cross-selling, wider distribution or pricing power, and they are harder to deliver.
How much should a buyer pay above standalone value?
No fixed rule exists. A disciplined buyer keeps the premium well below the net value of the synergies it controls, so that part of the value created stays with its own shareholders.
Which firms ask M&A cases most often?
M&A and due-diligence cases appear at all major firms. Candidates report them most often at Bain, which runs a large private equity practice, and at firms with transaction-advisory arms.
What is a commercial due diligence case interview?
It is a case modeled on the work consultants do for a private equity fund before it bids: size the target's market, check whether the target can hold its share, and test whether the management plan's revenue and margins are credible. It ends with a recommendation and the main risk.